Downing Street Says

Asked about the Prime Minister s update on the economy at Cabinet, the PMS said that the Prime Minister explained the action that was being taken at international level, including by Alistair Darling and his colleagues at Ecofin today. The Prime Minister also reiterated the fact that the Government stood ready to take whatever action was necessary to get the country through this challenging period for the global economy.

Put that the Government needed a plan and asked if it had one, the PMS replied that, as the Chancellor had said in the House of Commons yesterday, we were looking at every aspect, including with other countries, and with the financial sector. As the Chancellor had said yesterday, it would be irresponsible for the Government to speculate on the specifics of any future responses.

Put that some economists were saying that it was irresponsible to do nothing, the PMS said that as and when the Treasury were in a position to say more, he was sure it would. What we were not going to do was speculate prematurely.

Put that it was a problem when others were briefing on these meetings, the PMS said that he was a spokesman for the Government, not for other organisations or institutions. The Government was not going to fuel uncertainty by speculating on individual proposals.

Asked if, without speculating on outcomes, things were becoming more urgent, the PMS said that as and when the Treasury was in a position to make any announcements, it would do so. To reiterate the point, we stood ready to take whatever action was necessary to ensure the stability and the integrity of the financial system.

Asked if the Government had held, or was planning to hold, meetings with British banks, the PMS said that he was not in a position to comment on individual meetings that the Treasury may or may not have had.

Put that the Treasury must be talking to all interested parties, the PMS said, as the Chancellor had said yesterday in the House of Commons, that it was right that we looked at every aspect with other countries and the financial sector, but it would be irresponsible to speculate.

Asked if the Cabinet had discussed the fall in the Royal Bank of Scotland shares, the PMS said that he was not going to get into the specifics of any Cabinet discussion.

Asked what the Government would say to reassure people with savings of over 50,000 that their money was safe, the PMS said that, as the Prime Minister and Chancellor had said repeatedly, the Government stood ready to take whatever action was necessary in order to ensure the integrity of the financial system. We had already taken action in order to protect the deposits of savers in individual financial institutions that had got into trouble.

Asked if it had been the Government s intention to make public the meeting between the Chancellor, the Governor of the Bank of England and the banks, the PMS said that he would not necessarily accept the premise of that question and would not confirm, or not confirm, any individual meetings. The Government regularly met with representatives of the financial sector for private meetings, as you would expect.

Asked if the Chancellor would discuss the possibility of an EU bailout at the Ecofin meeting today, the PMS said that it was important, as the Chancellor and the joint statement from the EU had both made clear yesterday, that we continued to coordinate with our international partners, and in particular our European partners, which we would continue to do.

Asked when the Chancellor was returning to London and when he would next speak to the Prime Minister, the PMS said that the Chancellor was due back later today and that the Prime Minister kept in regular contact with the Chancellor.

Asked if the Chancellor still planned to go to Washington this week, the PMS said yes.

Asked if the Prime Minister had spoken to the German Chancellor last night, the PMS said that the Prime Minister had had a brief phone call with the German Chancellor last night. The Germans had clarified their position on saving deposits during the course of the day.

Asked if there had been any discussion over British customers of Icelandic banks, the PMS said that we were continuing to monitor the situation in Iceland very closely. We were in close contact with our partners in Iceland and the Icelandic Government; the Prime Minister spoke to the Prime Minister of Iceland on Sunday evening. There had been further contact with the authorities here and we would continue to work very closely with them.

Asked if Icelandic banks in Britain were covered by compensation schemes, the PMS said for specifics on individual banks it was best to speak to the Financial Services Authority (FSA).

Asked if there was going to be a G8 summit to discuss the global economy, the PMS said that, in general, we were supportive of the idea of regular contact between heads of government, however there was nothing specific planned at this point.

Asked if anything useful had come out of yesterday s National Economic Council meeting, the PMS said that it had been a very useful meeting and that there would be lots of similar meetings in the weeks ahead.

Put that some MPs were saying that the Government was dithering, the PMS said that Government had consistently taken decisive action in relation to issues in the financial markets; we had seen that in relation to Bradford and Bingley, Lloyds HBOS and the action the FSA took in relation to short selling. We stood ready to take whatever action was necessary and we would do so in a responsible way.

Put that the Government were being reactive rather than proactive, the PMS said that the Government had taken significant pre-emptive action; the Bank of England had been providing tens, if not hundreds, of billions of pounds of liquidity to financial markets in recent weeks. We had also taken specific action to deal with issues in relation to individual institutions, and we stood ready to do whatever was necessary.

Asked if there was a reason why the Government had not told people about their plans, the PMS said that the Government did not want to speculate irresponsibly about very market sensitive matters.

Put that this was a state of emergency and asked how long the Government needed to announce something, the PMS said that as and when the Treasury was in a position to make further announcements, he was sure it would. We stood ready to do whatever was necessary and we would act in a responsible way.

Asked for the Prime Minister s response to today s British Chambers of Commerce report, the PMS said that nobody was in any doubt about the seriousness of the current financial situation that we faced as a result of the global financial difficulties. This was a situation that was affecting all countries at the moment; we had already seen negative growth in the second quarter in a number of European countries like France and Germany, which the Office for National Statistics had not yet reported in the UK. The UK could not be insulated from these difficult world economic events.

Asked if the Government would announce a cut in business taxes, the PMS said that the Treasury would look at all representations.

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» Tuesday, October 7, 2008

Economy

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